Vista Energy S.A.B. de C.V. American Depositary Shares, each representing one series A share, with no par value

Hello everyone, and welcome to the VISTA's second quarter 2025 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To participate, you will need to press star 1-1 on your telephone. You will then hear a message advising your hand is raised. To withdraw your question, simply press star 1-1 again. Please note, This event is being recorded. Now it's my pleasure to turn the call over to VISTA's Strategic Planning and IRO, Alejandro Chernakov. Please proceed.

Thanks. Good morning, everyone. We are happy to welcome you to VISTA's second quarter of 2025 results conference call. I am here with Miguel Galucho, VISTA's Chairman and CEO, Pablo Verapinto, VISTA's CFO, Juan Garobi, VISTA's CTO, and Matias Weisel, VISTA's COO. Before we begin, I would like to draw your attention to our cautionary statement on slide two. Please be advised that our remarks today, including the answers to your questions, may include forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from the expectations contemplated by these remarks. Our financial figures are stated in U.S. dollars and in accordance with International Financial Reporting Standards, IFRS. However, during this conference call, we may discuss certain non-IFRS financial measures, such as adjusted EBITDA. Reconciliations of these measures to the closest IFRS measures can be found in the earnings release that we issued yesterday. Please check our website for further information. Our company is Sociedad Anónima Bursátil de Capital Variable, organized under the laws of Mexico, registered in the Bolsa Mexicana de Valores and the New York Stock Exchange. Our tickers are Vista in the Bolsa Mexicana de Valores and BIST in the New York Stock Exchange. As explained in our earnings release yesterday afternoon, please be advised that the operating and financial metrics shown in this presentation reflect the effects of consolidating the acquisition of Petronas Argentina as of April 1st, 2025. Finally, note that as of this webcast, we have moved all definitions which were previously at the bottom of each slide to an appendix at the end of the presentation. I will now tell the corner over to Miguel.

Thanks, Ale. Good morning, everyone, and welcome to this earning call. Q2 2025 was transformational for our company as we completed the acquisition of 50% stake in La Marga Chica, the second largest oil production block in Vaca Muerta. This transaction has turned Vista into a significantly larger company. Boosted by this acquisition, Q2 total production was 118,000 VOEs per day, an increase of 81% year-over-year. Oil production was 102,000 barrels per day, 79% year-over-year. Vista is now the largest independent oil producer and the largest oil exporter in Argentina. Total revenues during the quarter were $611 million, 54% above the same quarter of last year. Lifting cost was $4.7 per VOE, 4% above year over year. Capital expenditure was $356 million, driven by the ramp up in new well activity during the quarter, both in Vista operated block and in La Marga Chica. Adjusted EVDA was $405 million, an inter-annual increase of 40%. Net income was $235 million, including $102 million related to one-off, mainly related to the Petronas Argentina acquisition. Earnings per share were $2.3. Free cash flow outflow in this quarter was $1.4 billion, mostly reflected just from cash payment of the Petronas Argentina acquisition. Finally, net leverage ratio at the quarter end was 1.38 times on a pro-forma basis, reflecting the new debt raise to finance this cash payment. During Q2, we made solid progress on the operational front. We will actively pick up sequentially with 24 wells connected during the quarter, eight in Baja del Palo Este, four in Baja del Palo Este, and 12 corresponding to our 50% working interest in La Marga Chica. We continue to see the result of our strong focus on cost efficiency. We made decisive progress in reducing new world costs, capturing savings through innovation and efficiency, changes to our contract strategy, and contract renegotiations for specific consumables and services. This has led to a new drilling and completion cost of $12.8 million per well, representing a saving of $1.4 million per well, or 10%, which will be reflected in our cost of a new well starting in Q3 2025. Following the inauguration of Old Elval's duplicated pipeline in March, we eliminated old tracking as of April 1. to a $41 million saving compared to Q4 2024, substantially improving our margins. Total production was 118,000 VOEs per day, a sequential increase of 46% and inter-annual increase of 81%. This reflects the solid execution of our new well campaign as we connected 47 new wells in the last 12 months and the consolidation of La Marga Chica production as of April 1st. Oil production was 102.2 thousand barrels of oil per day, 79% above year-over-year and 47% above Q1. Gas production increased 93% on an inter-annual basis and 44% on a sequential basis. In Q2 2025, total revenues were $611 million, 50% higher year-over-year, driven by the strong increase in oil production, which more than offset lower oil prices. Oil exports tripled year-over-year to 5.6 million barrels for the quarter, boosted by the production growth and acquisition of La Marga Chica. Realized oil price was 62.2 dollars per barrel on average, down 13% on interannual basis, mainly driven by the lower international prices. During Q2, 100% of all volumes sold were at export parity prices. Lifting cost during Q2 was $4.7 per VOE, sequentially flat, reflecting our continued focus on cost control. Selling expenses per VOE came down 41% quarter-over-quarter, reflecting the elimination of oil tracking as of April 1st. This led to a saving of $28 million vis-a-vis Q1 and $41 million vis-a-vis Q4 2024, the quarter during which tracking volumes peaked. Adjusted EVDA during the quarter was $405 million, 40% higher on an inter-annual basis, driven by the production increase in our operating blocks and the consolidation of 50% working interest in La Marga Chica. On a sequential basis, adjusted EVDA margin increased 4% match points, and net back remained flat as the elimination of oil tracking offset lower oil prices. During Q2 2025, cash flow from operating activities was minus $9 million. reflecting in-contact payment of $250 million, a $59 million increase in working capital, and payments for maintenance pensions of $18 million. Cash flow used in investing activities was $1,347 million, reflecting accrued capex of $356 million, an increase of $140 million in working capital, and the acquisition of Petronas Argentina for $842 million net. The free cash outflow during the quarter was $1.4 billion, mostly reflecting the upfront payment of Petronas Argentina. Cash flow from financing activities was $770 million, reflecting the proceeds from borrowing of $1,379 million, and partially offset by the repayment of borrowings of $514 million. After quarter end, we have signed three term loans with local and international banks for a total of $500 million to cancel all outstanding maturities in the second half of 2025 and early 2026. Finally, cash at period end was $154 million Net leverage ratio on a pro-format basis reflecting the Petronas transaction stood at 1.38 times adjusted EBITDA. Our updated annual guidance reflects that, following the acquisition of La Marga Chica, we have emerged as a company with larger scale and stronger cash flow generation. Total production in 2025 is forecast between 112,000 and 114,000 BOEs per day. based on the planned well tie-ins, we forecast between 125 and 128,000 BOEs per day for the second semester, which leaves us with well positioned for a greater start in 2026. Assisted EVA is forecast between $1.5 and $1.6 billion for the year, assuming $65 brand for the second semester, equivalent to $60 per bar of real life price A change in $5 per barrel of realized oil price in the second half of the year results in a change in adjusted EVDA of $80 million. During the second semester, we forecast $825 to $925 million of adjusted EVDA or $1.65 to $1.85 billion on analyzed run-ride basis. To deliver this plan, we forecast to connect 59 new wells during the year, of which 34 were connected in the first semester, combining our operating block with our working interest in La Marga Chica. CAPEC in this plan is forecast at $1.2 billion for the year. This reflects our new drilling and completion cost. and $60 million of savings in facilities compared to the original 2025 guidance. Our new 2025 plan represents an improvement to the original plan. At $60 realized price, we are forecasting a neutral free cash flow during the second half of the year, composed of negative free cash flow in Q3 and positive free cash flow in Q4. evidencing a strong capital discipline in the context of high oil price volatility. Compared to the original guidance for the year, we are now forecasting to deliver 16% more production and 70% more adjusted EBITDA at $65 rent while maintaining the same capex level. The projected growth for 2025 compared to 2024 is 62% for production and 41% for adjusted EBITDA. To conclude this call, and before we move to Q&A, I would like to make some closing remarks. This has been a transformational quarter for Vista. The acquisition of 50% working interest in La Marga Chica materially boosted production and adjusted EVDA. Our company has emerged as the largest independent oil producer and the largest oil exporting in Argentina. On the operational front, we significantly reduced selling expenses by eliminating old tracking, which expanded adjusted EBITDA margin, even though prices dropped during the quarter. We have made change to our DMC contracting model, capturing savings through innovation and renegotiating rates with service providers, leading to a 10% lower world cost, capturing significant value through a highly competitive development cost. Finally, the revised annual guidance following the acquisition of La Marga Chica implies material production and adjusted FDA growth while significantly improving our free cash flow profile. Before we move to Q&A, I would like to thank everyone at VISTA for their outstanding work this quarter. Operators, we can now move to Q&A.

Thank you so much. And as a reminder, to ask a question, press star 11 on your telephone and wait for your name to be announced. To remove yourself, press star 11 again. Thank you. And please stand by for our first question. And it comes from the line of Bruno Montanari with Morgan Stanley. Please proceed.

Good morning, everyone. Thanks, Miguel, for the call and for the detail and the guidance. I have one question about La Margatica. Based on the available data, it seems that the well costs are a bit higher than those at BPO, while the EURs are a bit lower. So could you shed some light on why those differences exist, and if you could somehow contribute to improve the performance of those wells, even if you do not operate the area? And also perhaps on the rationale of investing more on that side of the fence compared to adding more wealth at BPO. Thank you very much.

Thank you very much.

Hi, Bruno. Thank you very much for your question. Well, let me touch base first probably on the ROC. La Marga Chica is in the best neighborhood of Vaca Muerta. It's right next to our block, as you know, Baja del Palo Este and both Aguada Federal. We have studied this area for a long time before we came to Vista and now in Vista. And definitely we understand that there's geological continuity there. So we have the same rock quality. If you look at the average weather activity, the performance of La Marga Chica is very robust. It's comparable 100% to the block that we operate. From the production standpoint now, when we look at what we have and what was delivered for Q1 and Q2, La Marga Chica came in Q1, as we said, with a lower quarter, but in Q2, it has been back to the level that he had in Q4. And for us, that reflects the quality of what we forecast, the quality of the rock that we saw, and that is confirming basically what we acquired in Pepasa. If we focus particularly in Q2, we saw a very solid ramp-up driven by 24 wells connected at 100 percent working interest, so a net of 12 wells for Vista. And the production of last ramp-up was 23 percent from 35,000 barrels per day in April to 43,000 barrels of oil per day in June. We have, as you probably can imagine, we have had several discussions with YPS. We are working very well with them. We have exchanged a lot of technical information that has been valuable for us and valuable for them. And we are trying to progressively start to exchange and put some of that conclusion that we have together in actions so i would say to be fair um for what we see uh is clearly that uh the fact that we will we will they are operating but we are working together we create synergies and we will create various costs of better productivities but not only in latch i will say also mahal palo este We are comparing not the cost. We are comparing what we are doing in terms of performance. We are comparing what we are paying for services. We are comparing technology. We are comparing how we work with SAM from one side or the other of the fence. We are looking at what we do on the borders. and how we can optimize wells from one side and from the other side, this for sure is going to bring value for both sides. For example, just to give an example, before they were thinking in large to drill 3,000 or 3,200-meter wells. That is not needed as far as we have an agreement on what will happen in the border of the two blocks. So there are plenty of synergies that basically will improve the performance of the two blocks.

Perfect. Thank you very much.

Thank you. One moment for our next question, please. And it comes from the line of Alejandro Demichelis with Jeffrey. Please proceed.

Good morning, Vista team. Thank you very much for taking my questions. The question is, Miguel, maybe you can double-click on how you see these kind of well-caused developments and potential further reductions going forward. And also, if you can kind of compare those well-caused in La Marga Chica versus what you have in BPO and BPE, please.

Well, thank you, Ale, for the question. Yes, for sure, I can double-click technically on what we are doing because we are putting a lot of focus on world cost today. I would say there are three main verticals that drive our initiative of world cost reduction. The first vertical is technology and innovation. And I will give you some example of that that I think will give you a picture of what we're doing today. The first example could be the use of wet sand in our operation. We piloted that technology last year, and now we have taken the decision to roll out the use of wet sand for the full operation. That will bring a lot of savings, immediate savings and future savings. We recently introduced a technology that is called a smart slide, which improves the drilling efficiency when we are doing the curve section, basically using a motor and then leaving the rotary steve to just to drill and navigate the horizontal section. This approach can reduce manual integration and result in time saving of around 16 hours per well. Another example is what we are implementing with our FRAC plan real-time monitoring system. We modify our pumping schedule on the fly from the remote operation center in order to optimize the FRAC size that basically is a direct function of the cost and also to avoid the runway FRACs. The frags that basically are not increasing the area of contact of the reservoir, but they are running away through micro fracture or because they find a fall or because they find a line of micro fracture to a different well. The second driver is cost reduction through negotiation of specific consumables of service like gasoline, gas oil, water transfer services, drilling fluids, and others. The third driver is related to the change of our contract strategy. We've been reviewing for the last six years our contract strategy, and our contract strategy has been very useful for us starting up and running Vista all the way to here. Now, we are right to a moment where integration basically was not bringing the amount of value that basically will take our cost performance reduction forward. Also, when we were doing comparison in a volatile oil prices scenario with U.S., we didn't show that the prices of the service were dropping the way they were dropping in U.S. So we basically decided to unbundle the services of the drilling rig into individual contracts. We did a few other things that it would take too long for me to explain. And we basically obtained savings to our overall cost. The savings already captured on our drilling and completion cost per well. have taken the world cost from $40.2 million to $12.8 million, so it's a 10% reduction. And you should assume that going forward, we will see more short-term reductions, and also you should expect that we'll see also mid-term and long-term reductions. Some of them are not related to contract renegotiation, but are more related to the innovation and technology changes that are coming from the changes that we are doing in the process. And back to Bruno's question, what we saw in La Marga Chica in terms of where we were, both companies, when we started to operate, so taking all this out of consideration, We have, with YPF, similar costs on that block, on what happened in La Marga Chica and what happened in Bajada de Palo Oeste. Hope I answered your question, Ale.

You know, that's perfect. Thank you very much.

Thank you. One moment for our next question, please.

Okay, and it comes from Danielle Guardiola with PTG Pactual. Please proceed.

Thank you very much for the presentation. Good morning, Miguel and Alejandro. My question is on free cash flow. In the second queue, we saw a large negative FCF in part driven by the acquisition of Petronas, but also due to a deterioration of working capital. And I wanted to ask you, Miguel, if you could elaborate on the deterioration of your working capital and what we should expect going forward. And also, considering the uncertain environment of oil prices, what is the company's mindset? in terms of free cash regeneration for 2026 and onwards. Would you feel comfortable operating on negative levels, or you're expecting to reach a more neutral level in 2026? Thank you.

Thank you, Daniel, for your question. So if you consider the VDASH generation and the CAPEX for the quarter, just to put your question in context, EBITDA is higher by around $60 million. But this particular quarter, we have a lot of one-offs, as you know. We led to the negative forecast law that you are pointing out. The most obvious is PEPASA acquisition, which requires $142 million of net outflow. We also have income tax payment of $250 million. an increase of $45 million in VAT credit, which most, I would say, should be reverted in the coming quarter. Because when you compare what we're doing quarter to quarter, it's for you clear to expect that part of that is going to be reversed. We also have an increase in capex working capital of $140 million US. That was related to a normalization of capex working capital. and 50 million dollars of new cash code from latch that was part was considered as part of the acquisition part of this change was also driven by the additional liquidity we have after issuing the international loan where at the same time that we were negotiating new tariffs with our service provider we decide to use part of the cash to cancel some of the basically services and DSO that we have in hand in order to also put a different condiment to the negotiation that we were having. Basically, based on the update plan that we present today, we are forecasting a neutral cash flow on the second semester. This is assuming $65 Brent, unrealizable prices of $60. This will be composed of a negative free cash flow in Q3 and a positive cash flow in Q4. We are not giving guidance of 2026 onward, but in terms of free cash flow, you basically have to assume two things. One, that in 2026 we continue growing, and second, that 2026 and 2026 onward in our model is a positive free cash flow outcome. Hope I have answered your question, Daniel.

Yeah, thank you, Miguel, for the detailed answer.

One moment for our next question, please. And it's from Bruno R. Morim with Goldman Sachs. Please proceed.

Thank you for taking my question. Good morning, everybody. So my question is related to the potential growth between now and the end of next year. So considering the maximum capacity that you have in the pipeline systems,

know what's the maximum production that vista could deliver by the end of next year thank you very much thank you bruno thank you for the questions a good question so uh we haven't as i said uh as i said to uh we haven't we haven't yet communicated 2026 numbers uh we are planning to hold and i will take the advantage of your question an investor day in Q4 2025 to provide long-term guidance and long-term forecast. But based on our transportation capacity, we could produce up to 144,000 barrels per day. That's today. And if we include our share of Vaca Muerta Sur capacity, we can go up to 200,000 barrels Of course, this is mid-27 when it will be delivered. So that is the full capacity that we have in our ham to grow production.

Thank you very much.

Thank you, Juan. Moving for our next question, please. It's from Leonardo Marcondes with Bank of America. Please proceed, please. Oh, he removed himself. Next question, please. One moment. Vicente Falanga from Bradesco BBI. Your line is open.

Thank you, Miguel, Ale, and Vista's team. We appreciate the guidance and the company's willingness to slow down operations to preserve the balance sheet. When we look towards the second half of the year, it seems like the global oil markets should be even more oversupplied. The question is if oil prices move towards the $50 per barrel and stays there for a while, would Vista be willing to slow down growth even further and continue to prioritize the balance sheet? Thank you very much.

Thank you Vicente for your question. Good question. So we have two drivers to protect us from lower prices. I would say the first one is our low cash cost base um let me let me expand a bit on that one if you add up the lifting cost the inexpensive and the gna this equates roughly to 11 dollars per barrel and increase all the way up to 20 dollars per barrel if you add to that 11 the royalties and the gross aid tax This one will be assuming a realized price of $6 per barrel. So $20 per barrel is our cash cost base. And that will take us a lot on the low oil price environment. The second is the flexibility in our drilling and completion contracts. that not only come from the contract, come from the fact that we have a very short capital cycle. And the fact also that we have 30 years concession with open and capital commitment also add to that flexibility. So this enable us to reduce capital burn rate at a very low cost. And we have proved that. I mean, we proved that during the COVID-19 pandemic. It was probably the best example of us testing all the way to the limit our agility and capacity to stop and to restart. So if we then were to fall Consistently, we have the full flexibility to protect our balance sheet by reducing activity. Now, just to take one potential scenario. Let's say that the brand falls consistently below 55. We could probably cut new weight cap from the plant and grow less and protect our balance sheet almost immediately. And remember also that we can do that gradually, so we don't need to wait until the oil price is 55. And also, I want to highlight that the reverse situation also applies to this. We can easily increase activity in case that we see our selling Q4 in a very good price or in a better oil price scenario. We know we are going to leave volatility and we have decided to be prepared for both scenarios, the low case scenario and also a more positive scenario that we are facing today. That's very helpful.

Thank you very much.

Thank you. One moment for our next question. And it comes from Leonardo Marcondes with Bank of America. Please proceed.

Hi, good morning, everybody. So my question is regarding the productivity here. What is the initial production rate? I mean, the IP30 that you assume for La Marga Chicken, Bahado de Palo Este, in your guidance, and I'm not sure if I heard correctly the answer for Bruno's question. Do you see any further room to improve La Marga Chica productivity by working together with YPF there?

Thank you very much. Hi, Leo. Thank you for your question.

I will get a bit technical on this one. And we have basically heard that question before from other analysts on the P30 of La Marga Chica. And we said La Marga Chica peak oil on average well is slightly lower than our operated block. But we don't think that is related to the ROC, or we don't think that is related to other or we don't think that wells have been operated in a fashion that is different to ours. We believe that each operator has different strategies to manage peak oil, and basically that comes from usually job management. And we may have a slightly different strategy than the one that IPF has. But we believe that it's not a reflection of the rock. So we have a long-term view regarding the reservoir management that focus in the EOR of the well. For us, EOR, so the ultimate recovery of the well, is more relevant than the peak oil. And on this basis, Our model showed that the La Marga Chica is as good as Bajada del Palo Este. In regard to the second part of your question, yes, we touched base on that, on Bruno's question, and the short answer is YPF people are top-notch operators, and they are doing a good job in La Marga Chica. What has changed, as we said, is that the fact that we have the opening between the two teams to review a lot of technical processes and details and technology that we use in a very open manner, in a very open fashion, that that is the spirit from both sides. And I give credit also to the management of YPF on that. uh we are finding areas of opportunities uh for most uh where we we probably you will see that from that discussion uh we will apply some of those in la marga chica and why not also so that discussions are are going very well and there are there's there are few things that we have differences And we will see what are the best practices to be applied. Ego aside, at the end of the day, we both are to generate value to our shareholders.

That's very clear. Thank you.

Thank you. One moment for our next question. And it's from Kevin McCurdy with Pickering Energy Partners. Please proceed.

hey good morning um the margin improvement is one of the highlights of the release which appears structural and related to the old ball expansion fully online um i believe the next midstream update for vista is the vmos pipeline i was wondering if you could give an update on the progress of that project and if there's any key milestones that we should be looking for thank you for taking my question

hi kevin thank you for your question yeah we are seeing very good progress uh the contractual start in may in all the fronts by line pumping station uh storage terminal also the offshore terminal we expect we expect the first stage of the project with the capacity of around 550 000 barrels per day to be ready in mid 27th Last week, in terms of financing, the team, the full team, closed a syndicate five-year loan of $2 billion at an interest rate of software 5.5. This is obviously very good news in terms of security and financing of 70% of the project cost. Financing was obtained also from five different international banks, Citi, Deutsche, Itaú, JP Morgan, I think Santander was the other one. That for me reflects somehow investor confidence in Vaca Muerta and in the old project of Vaca Muerta as well. So I would say good progress and very good news with this financing finally being closed. Yeah, now we have to, the whole thing have to execute.

Thank you.

Thank you so much. One moment for our next question, please. And it's from Andres Cardona with Citi. Please proceed.

Hi, good morning, everyone. I just have a question about how much appetite do you have today for potential M&A? And if you can share if the policies are advancing because in the media we are seeing less headlines about the matter. Thank you.

Thank you, Andres, for your question. yes we are always hungry uh for the right opportunity so uh we we are always looking is part of our strategic approach and we have demonstrated that we are we are as good business development as uh as operators so i think given the the increase of scale on our cash flow profile, we will actively continue assessing opportunities. I would say the only difference is that we have set a high bar in terms of value accretion and also a strategic fit. So the short answer is yes, you will continue to see us active on all the process and sometimes on things that are not part of the processes. But you should expect in terms of value allocation for our shareholders and strategic fit, we continue to be as disciplined as we have been so far. Thanks Andrés for the question.

One moment for our next question. And it comes from Tasso Vasconcelos with UBS. Please proceed.

Hi, thanks for taking my question here.

The discussion we have the most with investors is related to this, the capacity to start generating more solid and stable cash flow. The fact that you didn't actually increase the number of wells to be drilled this year, it is now 59, right before 2020, was between 52 to 60. Does it mean you are already seeking to reduce the growth speed and start generating more cash flow as from now? I know we already discussed this a little bit in the previous questions. You mentioned the expectation of pretty much neutral cash flow in the second half of this year, maybe an improvement afterward. So can you please detail the breakdown for this scenario? Could you expect more modest production growth and while treating both higher cash generation as from 2026? Thank you.

Thank you very much for your question.

First of all, I think for... We basically continue... We want to maintain a strong balance sheet And I mean, talking about 2020, talking about this year, 2025, where we see toward the end of the year, a more volatile brand and macro scenario. So basically, we continue to give clear signal for me what we have just said of capital discipline. We have issued new debt following the acquisition of La Malteca Chica. We have increased our leverage ratio. The ratio of still super healthy, but we have to calibrate capital spend. So we are pre-cut flow neutral. So we have to calibrate that to be cut flow neutral in the second half of the year. And for that, we have to also think that next year we need to start to reduce that ratio. So you should expect that you will have a negative free cash flow in Q3 and a positive negative cash flow in Q4. That basically will give you the cash flow neutral line toward the second half of the year.

Tasso, does that answer your question?

Give me a second. We are prepared for a potential ramp up of activity in the case that in Q4, we see a very good scenario of oil prices. And for that, that is easy. Also, you can put in account that in Q4, if we don't see that scenario, Also, we could use something that we have done in the past, and we can drill some dark wells, for example. So we will look at what is exactly the price scenario, and we will not be shy of modifying what we are presenting today if we have to do it because the context is more positive or more negative. And that is the way that you should look at 2025. Now, 2026 onward, with the price scenario of 70, 75, you should look at cash flow positive and continue growing. That has not changed at all. We are so far a growing story, and we'll continue being a growing story.

Okay, that's clear. Thank you. Appreciate it.

Thank you so much. One moment for our next question. And it's from George Gastolt with Latin Securities. Please proceed.

Good morning, and thank you for taking my question. I was wondering how much flexibility Vista has to take advantage of stronger local pricing. Specifically, is there room to sell more barrels into the local market if the premium over export parity holds?

Thank you for your question. So, Lucas, I mean, our strategy has been from day one, I would say, and put in place during COVID-19 is to gradually increase our export volumes, something that when you follow the story of Vista, we have achieved. today continue to be in the same also we said clearly to the people that managed to pass the base law and today they are running the secretary of energy we have seen that the law of the red tape that was basically making exportation of oil in a country that clearly was in a path to be an structural net exporter, have gone away. And therefore, today is much more seamless to get export volume when we continue serving the local market. So the scenario that you are basically constructing is a scenario of, for me, one that we have lived, of Paris-Criollo, where you have local prices above international road prices, that we have lived with that for a short while. So if that happens, first of all, the answer to your question is no. It's a simple answer. If that happens, what we'll be doing, most of the operators, we will be serving the local market with the same volume that we are seeing in the local market today. Historically, each operator has served a couple of refineries. And we continue doing so. even though when the export prices are higher than the local prices. So if that's reversed, we will continue with the same percentage, with the same volumes. Percentages are growing because we are producing more and exporting more. So the short answer is no, Jorge. OK, thank you. That's very clear.

Thank you. One moment for our next question that comes from Oriana Cobalt with Balance. Please proceed.

Hi, thanks for taking my question. This is Oriana Cobalt with Balance. I have a question on your free cash regeneration precisely, and how should we think in the tax burden in the upcoming quarters? Following the $215 million income tax payments that you made this quarter, are there any remaining tax payments in the remainder of the year? And how should we think of this as a component in your cash buildup in the medium term? Thanks.

Thank you, Oriana, for the question. So going forward, I think you should think of 35% income tax. Specifically, more specific for this year, we still have pending cash outflow that are related to advance tax payment of approximately $200 to $300 million. And that is included in our free cash flow guidance of this year.

So for your model, you should think that way.

Thank you.

You're welcome.

Thank you so much. One moment for our next question. That comes from Matias Cataruzzi with Adapta Securities.

Hi, Miguel. Can you hear me?

Yes, Matias, I can hear you.

Okay, great. Well, pleasure to meet you guys. I want to ask about the recent easings in effects restrictions here in Argentina. Do you see a greater flexibility or opportunities to implement a crude oil hedging program, protect cash flows amid the current or what you see at the end of the year, a more volatile market? Or will you keep with direct exposure to brands as some investors want?

Thank you, Matthias. This question of hedge income several times in the history of VISTA. So our operation is, we like to say, natural hedge against lower oil price. This hedge, I mean, the way that we think income from three different drivers. One, I mentioned already, is the low cash cost. I mentioned in a previous question that is around $20 per barrel. The second is the flexibility to reuse capex spend because our short cycle capex. So we drill a well in 14 days, 15 days, and we complete that well in another 15, 20 days. And third, the fact that we don't have new capital or regulatory commitment pending differentiates the one that you have in U.S. So given these three drivers, we can protect our balance sheet by reducing capex in a lower oil prices scenario. Having said this, I think the financial hedges is not easy to implement in the light of existing capital environment of Argentina, the capital control, the previous one, and we said yet today we don't have a fast forward. And it will be quite expensive for us if we want to basically hedge our production today. So every time that we have gone through that discussion or through the SOAP process or even we have engaged in an exercise of hedge, the outcome has been that it never makes sense for us to implement it.

Okay, great.

Thank you so much.

You're welcome.

Thank you. And as a reminder, if you do have a question, simply press star 11 to get in the queue. One moment for our next question. That is from Francisco Cascaron with Don Capital. Please proceed.

Hi, Miguel. Thank you for taking my question. My question is related to the CAPEX. How are you looking at your maintenance CAPEX moving forward? now that you added La Marga Chica into your portfolio?

Yes, thank you, Francisco, for the question, and welcome to this call. Assuming basically a production rate that we have for, that we have guide for this second semester, let's say 125,000 BUE per day, Our calculation is that we need around 50 wells net to vista to keep the production flat going forward. And when you take 50 wells and you made a simple mat, that equates approximately to $700, $750 million of capex. So that is what you should think if we ever come to that scenario.

I have answered your question, Francisco, I guess.

Yes, perfect. Thank you. You're welcome.

Thank you so much. And this ends our Q&A session for today. I will pass it back to Miguel for final remarks.

Well, gentlemen and ladies, thank you very much for joining and for supporting us and for continuing covering Vista. Needless to say that we, the full team of Vista, we are super excited about this acquisition and also, I mean, to see on those numbers on this quarter and the quarter to come, the scale that we have taken with the acquisition of La Marga Chica. So, Thank you very much for the comments, the coverage, and the questions. Have a very good day.

Thank you, ladies and gentlemen, and this concludes our program for today. You may all disconnect. Have a great day, everyone.